Dendreon, cancer drug developers top slate of buyout candidates

Jul 14, 2011 10:38am

This summer's been somewhat tame on the biotech mergers front. It's lacked a blockbuster deal on par with Sanofi's buyout of Genzyme, reports of which began last summer and kept biotech reporters chasing to tidbits of news for months. Now industry watchers tell Reuters that cancer drug firms like Dendreon ($DNDN), Seattle Genetics ($SGEN) and Exelixis ($EXEL) are top candidates for buyouts.

Dendreon is perhaps the most obvious biotech in the crop developers that could get scooped up in the near future, given that it's already got a drug on the market in Provenge, a immunotherapy against prostate cancer that costs a whopping $93,000. Morningstar analyst Damien Conover told the news service that Dendreon could have an immediate impact on the bottom line of an acquirer, making it that much more attractive compared with companies without drugs on the market.

To be clear, none of these companies is at all likely to fetch $20 billion like Genzyme or anything close to that sizable sum. But there are some interesting dynamics occurring in the cancer drug game and pharmaceutical business worth highlighting. For instance, the growth of the oncology drug market is expected to be double that of the rest of the pharmaceutical business, according to IMS Health data cited by Reuters. And companies like Bristol-Myers Squibb ($BMY) and others are seeing their buyout bets on cancer drug developers paying off as drugs like melanoma treatment Yervoy gain approvals this year.

We have seen some very successful oncology drugs," Fariba Ghodsian, chief investment officer at hedge fund DAFNA Capital, told Reuters. "Novel drugs with novel targets are in demand."

Analysts also talked up the prospects of a buyout of biotech giant Biogen Idec ($BIIB), which offers an acquirer a lot because of its large pipeline and top-selling multiple sclerosis therapies. If a Big Pharma were to make an offer for Biogen soon, what has been a quiet summer for major buyouts could become a lot more interesting.